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July 28, 2011, 11:22 AM EDT
By Matthew Campbell
(Updates with Juniper share price in 10th paragraph.)
July 28 (Bloomberg) -- Alcatel-Lucent SA, France’s largest telecommunications equipment maker, fell the most in almost three years in Paris trading as second-quarter sales missed estimates and amid concerns that the U.S. market is slowing.
Alcatel dropped as much as 17 percent to 2.80 euros, the biggest intraday decline since Oct 24, 2008, and was down 15 percent as of 4:57 p.m. The decline follows a 21 percent stock plunge yesterday for U.S. competitor Juniper Networks Inc., which also missed analyst estimates for quarterly revenue and said it’s “cautious” about the second half of 2011.
Second-quarter sales at Alcatel totaled 3.9 billion euros ($5.6 billion), less than the average 4.17 billion euros predicted by 14 analysts surveyed by Bloomberg. Paris-based Alcatel said it’s sticking to its full-year margin target. Chief Executive Officer Ben Verwaayen has pledged to restore the manufacturer to consistent profitability by the end of 2011 in a three-year turnaround that has included divestments.
“The company is not yet at the stage” where it can be called a turnaround, Thomas Langer, an analyst at WestLB in Dusseldorf, Germany, said by phone. Negative cash flow of 350 million euros in the second quarter is among indicators that should make investors cautious, he said.
Margin Target
The French company said it’s still aiming for adjusted operating profit to exceed 5 percent of sales. Alcatel, which is vying with Ericsson AB and Huawei Technologies Co. to roll out fourth-generation mobile-phone networks to serve devices such as Apple Inc.’s iPhone, said it will grow faster than competitors.
Alcatel returned to profit in the second quarter with 43 million euros in net income versus a 184 million-euro loss a year earlier.
Verwaayen is focusing Alcatel on supplying network gear to telecommunications operators such as Verizon Communications Inc. and AT&T Inc. The French company said on July 20 that it’s exploring options for the enterprise division, which sells office phones and related equipment.
“You have seen a massive shift in where we put our dollars and euros and yen to work,” Verwaayen said today on a conference call with reporters.
Consolidation among telecom operators, such as the proposed takeover of Deutsche Telekom AG’s U.S. mobile unit by AT&T, may reduce network spending by eliminating duplication, hurting equipment suppliers.
Juniper’s Plunge
Juniper, the second-largest maker of Internet networking equipment, fell the most in more than a decade yesterday and extended the decline today with a 2.6 percent drop to $24.01 as of 10:56 a.m. in New York Stock Exchange trading.
Second-quarter sales amounted to $1.12 billion while, at best, third-quarter revenue may match that figure, Sunnyvale, California-based Juniper said. That compares with analyst estimates of $1.15 billion for the second quarter and $1.22 billion for the third.
Alcatel’s North American revenue, which accounts for about 40 percent of total sales, declined 0.3 percent in the second quarter compared with the first three months of the year, the company said in a statement. Verwaayen said today that “the second half of the year will be strong” in the U.S.
WestLB’s Langer said the comments were “very vague.”
The stock decline today wiped about 1.2 billion euros from Alcatel’s value. About 101 million shares have traded, more than triple the average daily volume in the last three months.
--Editors: Tom Lavell, Robert Valpuesta
To contact the reporter on this story: Matthew Campbell in London at mcampbell39@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
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(Updates with Juniper share price in 10th paragraph.)
July 28 (Bloomberg) -- Alcatel-Lucent SA, France’s largest telecommunications equipment maker, fell the most in almost three years in Paris trading as second-quarter sales missed estimates and amid concerns that the U.S. market is slowing.
Alcatel dropped as much as 17 percent to 2.80 euros, the biggest intraday decline since Oct 24, 2008, and was down 15 percent as of 4:57 p.m. The decline follows a 21 percent stock plunge yesterday for U.S. competitor Juniper Networks Inc., which also missed analyst estimates for quarterly revenue and said it’s “cautious” about the second half of 2011.
Second-quarter sales at Alcatel totaled 3.9 billion euros ($5.6 billion), less than the average 4.17 billion euros predicted by 14 analysts surveyed by Bloomberg. Paris-based Alcatel said it’s sticking to its full-year margin target. Chief Executive Officer Ben Verwaayen has pledged to restore the manufacturer to consistent profitability by the end of 2011 in a three-year turnaround that has included divestments.
“The company is not yet at the stage” where it can be called a turnaround, Thomas Langer, an analyst at WestLB in Dusseldorf, Germany, said by phone. Negative cash flow of 350 million euros in the second quarter is among indicators that should make investors cautious, he said.
Margin Target
The French company said it’s still aiming for adjusted operating profit to exceed 5 percent of sales. Alcatel, which is vying with Ericsson AB and Huawei Technologies Co. to roll out fourth-generation mobile-phone networks to serve devices such as Apple Inc.’s iPhone, said it will grow faster than competitors.
Alcatel returned to profit in the second quarter with 43 million euros in net income versus a 184 million-euro loss a year earlier.
Verwaayen is focusing Alcatel on supplying network gear to telecommunications operators such as Verizon Communications Inc. and AT&T Inc. The French company said on July 20 that it’s exploring options for the enterprise division, which sells office phones and related equipment.
“You have seen a massive shift in where we put our dollars and euros and yen to work,” Verwaayen said today on a conference call with reporters.
Consolidation among telecom operators, such as the proposed takeover of Deutsche Telekom AG’s U.S. mobile unit by AT&T, may reduce network spending by eliminating duplication, hurting equipment suppliers.
Juniper’s Plunge
Juniper, the second-largest maker of Internet networking equipment, fell the most in more than a decade yesterday and extended the decline today with a 2.6 percent drop to $24.01 as of 10:56 a.m. in New York Stock Exchange trading.
Second-quarter sales amounted to $1.12 billion while, at best, third-quarter revenue may match that figure, Sunnyvale, California-based Juniper said. That compares with analyst estimates of $1.15 billion for the second quarter and $1.22 billion for the third.
Alcatel’s North American revenue, which accounts for about 40 percent of total sales, declined 0.3 percent in the second quarter compared with the first three months of the year, the company said in a statement. Verwaayen said today that “the second half of the year will be strong” in the U.S.
WestLB’s Langer said the comments were “very vague.”
The stock decline today wiped about 1.2 billion euros from Alcatel’s value. About 101 million shares have traded, more than triple the average daily volume in the last three months.
--Editors: Tom Lavell, Robert Valpuesta
To contact the reporter on this story: Matthew Campbell in London at mcampbell39@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
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